Scott Hanselman has a running commentary of the keynote and demos at the PDC.
Below are a couple of snippets:

Keynote - Bill Gates - continued

* Dynamic folder views ala "Office 2003 Search Folders" - built into explorer. He's viewing 1100 items with no slow down.
* Showing "stacks" that are views of data that are spread all over the system. Smacks of HyperCard. These stacks are dynamic based on WinFS metadata.
* Aero - click on a person and "view communication history" and query the metadata within WinFS to get all files related to communicating with that person.
* Aero - Common Dialogs for PEOPLE. The system knows that people are unique.
* Presence info built into the Aero experience.
* Lots of Transparency on all nonclient areas of windows.
* My opinion: The UI look really IS distinct and different than Mac's Jaguar. I honestly wouldn't have thought it possible. It's an extraordinarily clean look. I wonder how hard it is to do the gratuitous animations.

Keynote - Jim Alchin

* Jim Alchin here to do "a lap around Longhorn"
* WinFX (yes, that's FX)
- Next API beyond Win32
- DOS->Win16->Win32->WinFX
- Fewer lines of code is the point (Calling back to the "fewer moving parts" concept from BillG)
* Starting the "Lap"
* Longhorn is as much about fundamentals as anything else. It's to easy today for drivers and apps to piss off other drivers and apps. We're building in Sandboxing and Protection at every level.
* Performance Degradation over time - (Windows Arthritis, why doesn't it get Faster over time?)
* NO REBOOTS - Jim is on a campaign to stop reboots.
* "Click Once" - taking XCOPY deployment to the next level
* A "flight data recorder" built into the OS to diagnosis problems
* "SuperFetch" - the idea thatwe can look at what's going on in a system and determine what you will need in the future.
* Exploit the GPU